U.K. Inflationary Pressures Add to BOE's Case for Rate Hike
Dow Jones
Sep 23
0948 GMT - Renewed inflationary pressures as seen in the U.K. PMI data for September cement the Bank of England's tilt toward higher interest rates, Capital Economics' Ashley Webb says. Climbing energy prices pushed up input and output prices, suggesting firms are passing energy cost increases to customers via higher selling prices, he says in a note. "Both of these measures remain below their highs a few months ago, but they signal price pressures are starting to grow again," Webb says. While inflation could climb to around 4.2% early next year, the weak labor market will likely prevent second-round effects. "That's why we think interest rates will rise from 3.75% to 4.25% by early next year, rather than to 4.75% as investors expect."
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